Higher meals tax approved in York County, likely in James City County -- along with tax credit

It's May 6. In two separate meetings last night, James City County supervisors staked out their positions on meals tax increases and York County approved raising its meals tax from 4 to 6%.

James City estimates of potential savings from tax rates and credits

James City County supervisors seem to have the votes for increasing the meals tax, providing homeowners with a tax credit and lowering the tax rate to 80 cents, based on our nose count at their meeting Tuesday night.

They are scheduled to have one last public hearing and approve the $413.1 million budget at next week’s meeting May 12.

Supervisors were inclined to consider an admissions tax, but want to discuss further how it would be structured to shift the impact more towards visitors who attend Busch Gardens.

There is no admissions tax figured into the new budget that begins July 1. County staff recommended the meals tax increase – to 6% -- be deferred until January.

Supporters of the meals tax said it shifted costs away from home owners and towards visitors who come to the area.

The two Republicans on the board – Stonehouse member Barbara E. Null and Powhatan member Tracy Wainwright – opposed the meals tax increase and pushed considering cutting the budget further to keep tax rates lower.

“We just tax everybody to death. We need to go on an austerity program,” said Null. She said she would rather lower real estate taxes beyond the current proposal rather than provide a one-time tax credit.

Wainwright agreed that the county needed to cut expenses further than the $1.8 million in initial cuts proposed by County Administrator Scott Stevens.

Jamestown member Jim Icenhour said he could support cutting the tax rate to 79 cents per $100 in assessed home value, or settling at 80 cents with one or two cents’ tax credit in the next fiscal year.

James City County’s real estate tax rate is currently set at 83 cents. Stevens’ proposed budget recommends lowering it to 80 cents to offset a double-digit increase in assessments.

County Chair John McGlennon and Vice-Chair Ruth Larson expressed support for a tax credit and an 80-cent real estate tax rate. They said this would effectively spread out, over two years, the increased property taxes homeowners will pay due to higher home values.

Rising property assessments will increase the median homeowner’s taxes by 10.31% if no adjustments are made. Finance staff said reducing the tax rate to 80 cents and providing a one-time tax credit of two cents would lower the effective increase to 4.7%.

The tax credit does not require cutting the county’s operating budget because it would come from the more than $88 million the county has in its reserve fund, Finance Director Sharon McCarthy explained.

To protect its good credit rating, the county has a policy to keep at least 15% of its operating budget in reserve. It has about $10.1 million more than policy requires, McCarthy said, allowing the county to provide the credit.

Tuesday’s meeting was a continuation of the business meeting supervisors held last week to review expenses and discuss tax rates.

McCarthy provided them with several tables showing alternative ways to lower the tax bite on residents. Every penny of real estate tax generates $1.825 million in revenue, and every penny cut would require cutting that much from the budget, which by law must be balanced.

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York supervisors approve $314.7 million budget, increase meals tax